ECB Advances Distributed Ledger Tech Testing: New Partners, Use Cases in Next Phase
Summary:
The European Central Bank (ECB) is pushing ahead with its distributed ledger technology (DLT) testing initiative, moving into a second phase that includes new use cases and more participants. This phase features 48 financial institutions, including global banking giants like ABN AMRO and HSBC. The testing covers domestic and foreign exchange payments, securities-related cases, and real-time gross settlements. This process, using both cash and tokenized securities, could potentially be applied to central bank digital currencies. The same interoperability systems are being tested yet again in Project Meridian, which also involves the central banks of several other countries.
The European Central Bank (ECB) continues to expand experimentation with distributed ledger technology (DLT) that started in April. The second phase of testing introduces new use cases, partnering with additional private financial firms and three extra central banks. The updated phase will be joined by forty-eight financial institutions, which comprise sections of several top global banks such as ABN AMRO, BNP Paribas, Bank of New York Mellon, HSBC, J.P. Morgan, and Société Générale. The selection method for participants involved both testing phases was a recruitment appeal launched in December.
In this next stage, the test pool will probe wholesale internal payments within the Eurozone, a range of securities-related cases, and forex payment-versus-payment operations between central banks. The latter two tests will employ central bank money for live settlements instead of commercial bank money.
The previous testing wave included 14 participants encompassing both private institutions and central banks. Some of these are part of the second phase as well. The initial phase reviewed the delivery-versus-payment settlement of transactions involving government bonds, utilizing three interoperability solutions established by different European central banks: Deutsche Bundesbank's Trigger Solution, Banca d'Italia's TIPS Hash-link and Banque de France's Full DLT Interoperability.
Payment-versus-payment, and delivery-versus-payment come under the category of real-time gross settlement. The testing focus is the union of DLT transaction interoperability with the existing TARGET settlement system of the ECB.
The tests, using both cash and tokenized securities, have wider applications and could potentially be applied to central bank digital currency (CBDC) too. The French solution was the only one tuned specifically for CBDC.
As part of Project Meridian's continuity, the same three interoperability systems are being tested. The project includes the Bank of England and also involves the central banks of Belgium, Germany, France, Italy, Lithuania, and the Netherlands, Spain and the Hong Kong Monetary Authority.
Published At
6/24/2024 8:37:23 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.